Core Financial Highlights: A Look at the Numbers

MKH Oil Palm’s performance this quarter shows a nuanced picture. While the revenue for the three months ended 30 June 2025 saw a decrease compared to the same period last year, the company managed to significantly enhance its profitability.

Quarterly Performance (3 Months Ended 30 June 2025 vs. 30 June 2024)

Despite a 15.8% decline in revenue for the current quarter, MKH Oil Palm reported a healthier 14.2% increase in Profit Before Tax and a 10.3% rise in Profit After Tax compared to the corresponding quarter last year. This impressive profit growth, even with lower sales, was primarily driven by the higher average selling prices for its key products: Crude Palm Oil (CPO), Crude Palm Kernel Oil (CPKO), and Palm Kernel (PK). It’s a testament to effective cost management and favorable commodity price trends offsetting volume effects.

Year-to-Date Performance (Period Ended 30 June 2025 vs. 30 June 2024)

Looking at the broader picture, the financial year-to-date performance is even more robust. The Group achieved an increase in revenue to RM277.4 million from RM261.6 million, a modest 6.0% uptick. However, the profit figures truly shine: Profit Before Tax surged by a remarkable 62.2% to RM92.6 million, and Profit After Tax grew by 59.5% to RM68.9 million. This significant uplift is attributed to higher average selling prices for CPO and PK, alongside the successful commencement of CPKO sales in February 2025, adding a new revenue stream and margin contributor.

Preceding Quarter Comparison (3 Months Ended 30 June 2025 vs. 31 March 2025)

Comparing the current quarter to the immediate preceding quarter (Q2 FY2025), revenue dipped slightly from RM96.2 million to RM78.6 million. This was mainly due to a decrease in sales volume. Consequently, Profit Before Tax also saw a reduction from RM26.1 million to RM24.0 million. However, this decline was mitigated by improved profit margins from CPKO and PK sales, although the payment of a RM2.2 million withholding tax for dividend income from an Indonesian subsidiary did impact the quarter’s profit.

Key Production and Price Indicators

Understanding the operational drivers is key. Here’s a snapshot of the Group’s production and average selling prices for the financial year-to-date:

The higher average selling prices for CPO (RM3,856/MT) and PK (RM2,854/MT) year-to-date, coupled with the introduction of CPKO sales at an average of RM6,883/MT, clearly demonstrate the positive impact of commodity markets on the Group’s bottom line.

Financial Health and Cash Flow

A quick glance at the balance sheet reveals a healthy position. As at 30 June 2025, total assets stood at RM668.5 million, up from RM638.8 million at 30 September 2024. Total equity also increased to RM575.5 million from RM572.0 million. Net assets per share improved slightly to RM0.57 from RM0.56.

Cash flow from operating activities was robust, with a net cash inflow of RM82.35 million for the year-to-date, significantly higher than RM46.59 million in the preceding year-to-date. This strong operational cash generation has bolstered the Group’s cash and cash equivalents to RM244.4 million as of 30 June 2025, providing a solid foundation for future investments and operations.

Strategic Outlook and Future Prospects

Looking ahead, MKH Oil Palm’s prospects for the financial year ending 30 September 2025 remain positive. The demand for CPO is expected to stay strong, with prices in Indonesia trading within a favorable range of RM3,600/MT to RM3,800/MT (net of export levy and duty).

Mitigating Challenges and Enhancing Efficiency

The Group continues to implement proactive measures to ensure operational efficiency and competitiveness. These include:

• Improved Water Management: Enhancing the water management system is crucial for plantation productivity, especially in a sector susceptible to weather variations.
• Mechanisation Efforts: Ongoing mechanization helps maximize crop collection and quality, while also addressing rising labor costs, a common challenge in the plantation industry.
• Technology Adoption: Optimizing software applications to track Fresh Fruit Bunches (FFB) evacuation from fields to mills is a smart move. This aims to further increase production efficiency and Oil Extraction Rate (OER), directly impacting profitability.

Future Expansion: A New Acquisition

Subsequent to the reporting period, the company announced a significant strategic move: the proposed acquisition of PT. Tunas Tani Tutus (“PT Tunas”) for approximately RM9.1 million. This acquisition, if completed, will see PT Tunas become a subsidiary of MKH Oil Palm, signaling a potential expansion of its land bank and operational capacity, further strengthening its position in the Indonesian palm oil sector.

Utilisation of IPO Proceeds

The Group has made progress in utilising its IPO proceeds from April 2024. Key projects like the setup of a palm kernel crushing facility and repayment of a related party loan have been completed. However, some capital expenditure items, such as the expansion of land banks and electricity supply coverage, are still in progress. The completion of these initiatives will be critical for the Group’s long-term growth trajectory.